CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. DISTRIBUTORSHIP AGREEMENT
EXHIBIT
10.28
*CONFIDENTIAL
PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
THIS
EXCLUSIVE DISTRIBUTORSHIP AGREEMENT (this “Agreement”) is made as of this 22nd
day of June, 2006 by and between Smart Energy Solutions, Inc., a corporation
organized and existing under the laws of the State of Nevada, United States,
having its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx, XX
00000(“Manufacturer”) and Xxxxxx Group, Inc., a corporation organized and
existing under the laws of the State of Florida, having its principal place
of
business at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxxx, XX 00000
(“Distributor”).
RECITALS
WHEREAS,
Manufacturer is the exclusive owner and has all right, title and interest to
proprietary products currently referred to as the “Battery Brain”;
and
WHEREAS,
Distributor desires to be appointed as the exclusive distributor of the product
to new car dealers (the “Market Segment”)in the territory set forth in Exhibit A
(the “Territory”), and Manufacturer has agreed to appoint Distributor as its
exclusive distributor on the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the adequacy, sufficiency
and receipt of which are hereby acknowledged, the parties hereto agree as
follows:
1. Exclusive
Appointment of Distributor and Grant of License; Product
Alterations.
1.1
Exclusive
Appointment.
Pursuant to the terms and conditions contained in this Agreement, Manufacturer
grants and Distributor accepts (i) the exclusive right to promote and sell
the
Battery Brain product as such are set forth in Exhibit D attached hereto and
made a part hereof (the “Product”) in the Market Segment and Territory,
including to such customers in the Territory that intend to export the Product
outside of the Territory; and (ii) a non-exclusive, royalty-free license to
use
Manufacturer’s trade name and trademark in connection with this
Agreement.
1.2
Sole
Distributorship.
During
the Term (as defined below), Manufacturer shall not appoint any other person
or
entity as a distributor or agent for the sale of the Product in the Market
Segment and Territory. Notwithstanding the foregoing, Manufacturer shall be
entitled to sell the Product outside the Market Segment and Territory even
if
such customers intend to export the Product into the Territory and Manufacturer
shall be entitled to sell the Product directly in the Territory, provided that
(i) its efforts thereunder do not conflict with the efforts of the Distributor;
and (ii) Distributor is compensated for such sales by Manufacturer.
1
1.3
Alterations
to Product.
Manufacturer, at its option, subject to giving ninety (90) days notice, may
discontinue the manufacture and/or sale of the Product, and may modify or alter
the Product as Manufacturer, in its sole discretion, deems appropriate;
provided,
however,
that in
the event Manufacturer modifies or alters the Product, other than pursuant
to an
individual customer request or requirement, then Manufacturer shall, at no
cost
to Distributor, trade out all of Distributor’s then remaining inventory for the
new, modified or altered Product. This trade however, shall only apply to
discontinued Products and not to new or enhanced Products.
2.
Marketing;
Sales and Training.
2.1 Preliminary
Marketing Plan; Business Plan.
Prior
to or simultaneously herewith, Distributor has submitted to Manufacturer a
preliminary marketing plan, summarizing its plan for the promotion, marketing
and distribution of the Product within the Term. Within thirty (30) days of
the
date hereof, Distributor shall submit to Manufacturer a business plan (the
“Distributor’s Business Plan”) of its promotion, marketing and distribution of
the Product within the Territory, including without limitation, sales targets
for each quarter in the Term. The Manufacturer and Distributor shall agree
to
the quotas and other milestones set forth in the Distributor’s Business
Plan.
2.2 Marketing
Materials.
Manufacturer shall provide to Distributor, upon request and at no cost to
Distributor, copies of English-language sales materials with respect to the
Product that Manufacturer generally makes available to its distributors within
the United States of America, and Distributor may reproduce such materials
as
reasonably required, provided that all copyright, trademark and other property
markings and notices are reproduced in full. Such materials shall remain the
property of Manufacturer and, except insofar as they are distributed by
Distributor in the course of the performance of his duties under this Agreement,
shall be returned to Manufacturer promptly following the expiration or
termination of this Agreement. Manufacturer shall have the right to review
and
approve all of Distributor's sales materials bearing the name or trademarks
of
Manufacturer to ensure proper use of Manufacturer's name and trademarks and
the
accuracy of any product performance claims, such approval not to be unreasonably
withheld.
2.3
Certain
Marketing Obligations.
In
connection with the promotion and marketing of the Products, Distributor shall
(a)
make
clear, in all dealings with customers and prospective customers, that it is
acting as distributor of the Products and not as agent of Manufacturer;
(b)
comply
with all legal requirements from time to time in force relating to the storage,
distribution, and sale of the Products; and
2
(c)
provide
Manufacturer on a quarterly basis a report, in such form as Manufacturer may
reasonably request, of all activity relating to the Product during the period;
and consult with Manufacturer for the purpose of assessing the state of the
market in the Territory.
2.4 Sales
Organization.
(a)
Distributor
represents and warrants that the description of its sales organization that
has
been provided to Manufacturer and attached hereto as Exhibit B is true and
accurate in all respects and fairly represents the sales organization of
Distributor.
(b)
Distributor
shall establish and maintain an adequate organization for sales, and, where
appropriate, after-sales service, with all means and personnel as are necessary
to ensure the fulfillment of its obligations under this Agreement, including
without limitation, meeting the objectives set forth in the Distributor’s
Business Plan.
2.5
Sales
Targets.
During
each year of the Term, Distributor shall purchase a quantity of units of the
Products equal to at least the guaranteed minimum target, which may be amended
from time to time upon mutual written agreement between the parties hereto
(the
“Guaranteed Minimum Target”) for the applicable year as follows:
|
Year
|
Guaranteed
Minimum Target
|
|
1st
Year of Term
|
*
|
|
2nd
Year of Term
|
*
|
|
3rd
Year of Term
|
*
|
If
at the
end of the applicable year, the Guaranteed Minimum Target has not been attained,
Manufacturer shall be entitled, at its option, subject to giving ten (30) days
notice, to (1) terminate this Agreement, or (2) cancel Distributor’s
exclusivity, or (3) reduce the extent of the Territory. This right shall,
however, be exercised in writing not later than three (3) months after the
end
of the year in which the Guaranteed Minimum Target has not been
attained.
2.6 Training.
The
Manufacturer shall provide Distributor with reasonable product training with
respect to the Products. All of the Manufacturer's costs and expenses associated
with such assistance shall be borne by the Manufacturer.
3.
Purchase
and Delivery of Products.
___________________
*
Omitted
pursuant to a request for confidential treatment and filed separately with
the
Securities and Exchange Commission.
3
3.1
Purchase
Order.
Distributor shall order the Products from Manufacturer by submitting to
Manufacturer a purchase order (the “Purchase Order”) in the form set forth in
Exhibit C attached hereto and made a part hereof. Nothing
in this Agreement shall entitle Distributor to any priority of supply in
relation to the Products as against Manufacturer’s other distributors or
customers.
3.2 Precedence
of Terms.
Sales
of the Products pursuant to the Purchase Orders shall be governed by this
Agreement and the Manufacturer’s Standard Terms of Sale (the “Standard Terms”)
as they may be in effect from time to time, which may be changed by Manufacturer
in its sole discretion. Manufacturer shall give to Distributor notice in writing
of any material change in such Standard Terms prior to such change taking
effect. To
the
extent that there is a conflict or inconsistency between the terms of this
Agreement and the Standard Terms, the terms of this Agreement shall take
precedence.
3.3 Additional
Duties of Distributor.
With
respect to each Purchase Order, Distributor shall be responsible at
Distributor’s cost and expense for: (1) ensuring the accuracy of the Purchase
Order; (2) providing Manufacturer with any information necessary to enable
Manufacturer to process the order; (3) complying with applicable legal
requirements in the Territory, including, without limitation, labeling and
marketing legal requirements; and (4) obtaining any necessary governmental
permits, licenses, certificates of origin, approvals, and other requisite
documents in respect of the importation of the Products into the Territory
and
their resale in the Territory. Further, Distributor shall maintain an adequate
amount of Product inventory to service the Market Segment in the Territory,
and
the initial amount of Product for which Distributor shall issue a purchase
order
hereunder is 6,000 units. Distributor shall also maintain a sales force
reasonably adequate to service the Market Segment in the Territory.
3.4 Delivery.
As soon
as practicable after Manufacturer’s acceptance of a Purchase Order, but in no
event more than three (3) days, Manufacturer shall notify Distributor of the
estimated delivery date (the “Estimated Delivery Date”) for the Products
purchased. Manufacturer shall deliver the purchased Products at Distributor’s
expense in accordance with the method specified in the Purchase Order.
3.5
Title;
Risk of Loss.
The
title to any of the Products shall not pass to Distributor until Manufacturer
has received payment in full of Purchase Order; provided,
nevertheless,
that
the risk of loss of or damage to any of the Products shall pass to Distributor
from the time of delivery to the carrier at Manufacturer’s premises, whichever
is earlier.
3.6 Time
Limit for Rejection or Revocation of Acceptance of the Goods.
Rejection or revocation of acceptance by Distributor of the Products must be
made within seven (7) days after delivery of the Products to Distributor. No
defective Products may be returned to Manufacturer unless first authorized
in
writing by Manufacturer.
4
4.
Payment
for Products.
4.1
Prices.
Attached hereto as part of Exhibit D is Manufacturer's price schedule for the
Products. All prices are exclusive of import duties, landing charges, and
governmental excise, sales, use, occupational and similar taxes. The prices
shall be subject to change by Manufacturer from time to time upon sixty (60)
days prior written notice to Distributor; provided, however, that no price
change shall affect purchase orders accepted by Manufacturer prior to notifying
Distributor of such change.
4.2
Transportation
Costs.
Distributor shall, in addition to the price, be liable for arranging and paying
all costs of transport and insurance. If Manufacturer agrees at the request
of
Distributor to arrange for transport and insurance as agent for Distributor,
Distributor shall reimburse Manufacturer the full shipping, handling, and other
expenses thereof and all the applicable provisions of this Agreement shall
apply
with respect to the payment of such costs as they apply to payment of the price
of the Products.
4.3
Taxes;
Duties.
All
prices for the Products are exclusive of any applicable taxes, including sales
tax or any other value-added tax, for which Distributor shall be additionally
liable. Distributor shall pay costs and expenses of obtaining any necessary
governmental permits, licenses, approvals, and other requisite documents in
connection with the import or export of the Products and any applicable duties,
customs, tariffs, or other charges thereon.
4.4
Payment
Method.
Unless
otherwise agreed by the parties in writing, payment shall be made by the
Distributor separately for each purchase order accepted by the Manufacturer.
The
Distributor shall pay all invoice amounts within sixty (60) days of the date
of
invoice in U.S. dollars. .
4.5 Failure
to Pay.
If
Distributor fails to pay the price and other amounts due for any Products prior
to or on the date such payment is due, Manufacturer shall be entitled (without
prejudice to any other right or remedy it may have) to:
(a) cancel
or
suspend any further delivery to Distributor;
(b)
sell
or
otherwise dispose of any Products which are the subject of any order by
Distributor, whether or not appropriated thereto, and apply the proceeds of
sale
to the overdue payment; and
(c)
charge
Distributor interest on the price at the rate of the lesser of one and one-half
(1.5%) per cent per month from the date the payment became due until actual
payment is made.
5.
Resale
by Distributor.
5.1
Generally.
Distributor shall be entitled to sell, in its own name and for its own account,
the Products in the Market Segment and Territory. Distributor shall have the
right during the Term to describe itself as Manufacturer’s “Authorized
Distributor” for the Products in the Market Segment and Territory, but shall not
hold itself out as Manufacturer’s agent or as being entitled to bind
Manufacturer in any way. Distributor shall use its best efforts to promote
the
sale of the Products in the Territory in accordance with the Distributor’s
Business Plan and Manufacturer’s policy and shall protect Manufacturer’s
interests. Distributor agrees that all its sales efforts are to be directed
only
to customers in the Territory.
5
5.2
Resale
Prices.
Distributor shall be entitled to charge its customers the resale prices of
the
Products as it determines in its sole discretion. Distributor shall avoid such
pricing policies as would clearly adversely affect the image of the Products.
6.
Manufacturer’s
Trademarks; Other Intellectual Property; IP Indemnity;
Confidentiality.
6.1
Authorization.
Manufacturer hereby authorizes Distributor to use Manufacturer’s trademarks and
trade names (collectively, the “Trademarks”) in the Territory solely on or in
relation to the Products for the purposes only of exercising its rights and
performing its obligations under this Agreement. Such authorization shall cease
immediately upon the expiration or termination, for any reason, of this
Agreement; provided,
however,
that
Distributor shall have the limited right sell the Products in stock at the
date
of expiration of this Agreement which bear the Trademarks.
6.2
Use
of
Trademarks.
Distributor shall ensure that each reference to and use of any of the Trademarks
by Distributor is in a manner from time to time approved by Manufacturer and
accompanied by an acknowledgment, in a form approved by Manufacturer, that
the
same is a trademark (or registered trademark) of Manufacturer.
6.3
Prohibited
Conduct.
Distributor shall not:
(a)
Make
any
modifications to the Products;
(b)
Alter,
remove or tamper with any Trademarks, numbers, or other means of identification
used on or in relation to the Products;
(c)
Use
any
of the Trademarks in any way which might prejudice their distinctiveness or
validity or the goodwill of Manufacturer therein or in any manner not previously
approved by Manufacturer;
(d)
Use
in
relation to the Products any trademarks other than the Trademarks without
obtaining the prior written consent of Manufacturer; or
(e)
Use
in
the Territory any trademarks so resembling any Trademark as to be likely to
cause confusion or deception.
6
6.4
Rights
in Trademarks.
Except
as provided in this Section 6, Distributor shall have no rights in respect
of
any Trademarks used by Manufacturer in relation to the Products or of the
goodwill associated therewith, and Distributor hereby acknowledges that, except
as expressly provided in this Agreement, it shall not acquire any rights in
respect thereof and that all such rights and goodwill are, and shall remain,
vested in Manufacturer. Distributor shall not register any Trademarks (or which
are confusingly similar to the Trademarks) in the Territory or elsewhere.
6.5
Enforceability
of Intellectual Property Rights.
Distributor shall take all such steps as Manufacturer may reasonably require
to
assist Manufacturer in maintaining the validity and enforceability of the
intellectual property rights of Manufacturer in the Territory provided
that
Manufacturer shall reimburse Distributor for all costs or other liabilities
arising from or in connection with such steps which have previously been
approved by Distributor in writing.
6.6
Agreements.
Distributor shall, at the request of Manufacturer, execute such registered
user
agreements or licenses in respect of the use of the Trademarks in the Territory
in the name of the Manufacturer as Manufacturer may request, provided
that the
provisions thereof shall not be more onerous or restrictive that the provisions
of this Agreement.
6.7
Protection
of Intellectual Property.
Distributor shall not do or authorize any third party to do any act which would
or might invalidate or be inconsistent with any intellectual property rights
of
Manufacturer.
6.8
Notification
of Infringement; Intellectual Property Indemnification.
Distributor shall promptly notify Manufacturer of any actual, threatened or
suspected infringement in the Territory of any intellectual property rights
of
Manufacturer which comes to Distributor’s attention, and of any claim by any
third party so coming to its attention that the importation of the Products
into
the Territory, or their sale therein, infringes any rights of any other person,
and Distributor shall at the request and expense of Manufacturer do all such
things as may be reasonably requested to assist Manufacturer in relation to
any
such infringement or claim. Manufacturer shall defend, indemnify, and hold
harmless the Distributor for any loss, damage, liability or expense, including
reasonable attorneys’ fees, arising out of any third party claim of infringement
of any patent, trademark, trade names, or copyright based on the manufacture,
sale, license, use or installation of any materials, equipment, programs or
services in connection with this Agreement. Manufacturer shall defend or settle,
at its own expense, any action for which it is responsible
hereunder.
6.9 Confidential
Information.
During
the Term and after the expiration of the Term, Distributor shall hold in
strictest confidence and shall not directly or indirectly disclose, use or
publish any of the Confidential Information (defined below) unless expressly
authorized in writing by Manufacturer. As used in this Agreement, the term
"Confidential Information" means all items, materials and information which
belong to the Manufacturer and are not generally known to the public, or which
have been confidentially provided to the Distributor. Confidential Information
includes, but is not limited to, this Agreement and the terms hereof, pricing
information and policies, information concerning: trade secrets (as defined
by
applicable law); computer programs
7
(code);
software; research and development projects and materials; the Distributor’s
Business Plan; methods of operation; technical information; processes; formulas;
compositions; systems; techniques; non-public know-how of the Manufacturer
or
its customers; customer account information, lists and data; estimating
procedures; sources of supplies or materials; marketing plans or strategies;
the
existence and contents of agreements; financial information, data, statements
or
accounts; and all documentation, reports and data (recorded in any form)
relating to the foregoing. Confidential Information does not include anything
described above which (i) is or becomes generally available to the public other
than as a result of a disclosure by Distributor,
its agents, representatives, advisors or employees; or (ii) becomes available
to
Distributor
or
to Distributor’s agents, representatives, advisors or employees on a
non-confidential basis from a source which was not then prohibited from
disclosing such Confidential Information to us by a legal, contractual or
fiduciary obligation to Manufacturer; or (iii) was in Distributor’s possession,
or in the possession of Distributor’s agents, representatives, advisors or
employees, or otherwise available to Distributor’s, or Distributor’s agents,
representatives, advisors or employees, on a non-confidential basis prior to
its
disclosure to Distributor or one or more of Distributor’s agents,
representatives, advisors or employees; or (iv) was independently developed
by
Distributor without access to or the benefit of the Confidential Information.
7.
Term
and Termination.
7.1
Term.
The
term of this Agreement shall be for three (3) years, renewable annually,
commencing as of the date hereof, unless cancelled or terminated earlier as
provided in this Agreement (the “Term”). Distributor understands that the
Distributor’s sales of the Products during each year of the Term shall be
reviewed at the end of such year and this Agreement may be terminated pursuant
to Section 2.5 should the Guaranteed Minimum Target for the applicable year
not
be attained.
7.2
Termination.
(a)
Manufacturer
shall be entitled to terminate this Agreement by giving not less than twenty
(30) days’ written notice to Distributor if there is any material change in the
management, ownership or control of Distributor. Distributor agrees to provide
notice to Manufacturer no earlier than thirty (30) business days prior to the
consummation of any change in the management, ownership or control of
Distributor.
(b)
Without
prejudice to any other provision in this Agreement, Manufacturer shall be
entitled to terminate this Agreement by giving not less than five (5) days’
written notice to Distributor upon the occurrence of any of the following:
(i)
Distributor
fails to perform its obligations under the Distributor’s Business Plan and such
non-performance continues for thirty (30) days after written notice giving
full
particulars of such non-performance and requiring it to be
remedied;
8
(ii)
Distributor
commits
any breach of any of the provisions of this Agreement and, in the case of a
breach of a payment obligation, fails to remedy the same within five (5) days
after written notice of such failure to pay, and in the case of a breach of
any
other obligation, fails to remedy the same within thirty (30) days after receipt
of a written notice giving full particulars of the breach and requiring it
to be
remedied ;
(iv)
Distributor
ceases to carry on business or becomes unable to perform its obligations to
Manufacturer.
(c)
In
addition to Manufacturer's right to terminate this Agreement pursuant to 7.2(b)
hereof, either party may terminate this Agreement as follows:
(i)
if
the other party commits a material breach of any of the provisions of this
Agreement and does not cure such breach within thirty (30) days after receipt
of
written notice thereof;
(ii)
immediately if the other party is unable to obtain or renew any permit, license
or other governmental approval necessary to carry on the business contemplated
under this Agreement;
(iii)
immediately upon written notice to the other party in the event that proceedings
in bankruptcy or insolvency are instituted by or against the other party, or
a
receiver is appointed, or if any substantial part of the assets of the other
party is the object of attachment, sequestration or other type of comparable
proceeding, and such proceeding is not vacated or terminated within thirty
(30)
days after its commencement or institution; or
(iv) without
cause one hundred eighty (180) days after the delivery to the other party of
written notice of termination.
7.3
Obligations
Upon Termination.
Upon
expiration of the Term for any reason:
(a) All
further rights and obligations of the parties shall cease, except that the
parties shall not be relieved of (i) their respective obligations to pay monies
due or which become due as of or subsequent to the date of expiration or
termination, and (ii) any other respective obligations under this Agreement
which specifically survive or are to be performed after the date of expiration
or termination
(b)
Within
thirty (30) days after the Term, Distributor shall, at its own expense, return
to Manufacturer all promotional material and other documents and samples which
have been supplied to it by Manufacturer which are in Distributor’s
possession;
9
(c)
At
any
time after the Term, Manufacturer, at its option, shall be entitled (but not
obliged) to buy from Distributor all or any part of the inventory of the
Products then held by Distributor at the price originally paid by Distributor.
Any Products not so purchased by Manufacturer can be sold by Distributor in
accordance with this Agreement within one-hundred eighty (180) days after the
Term.
(d)
Distributor
shall have no claim against Manufacturer for compensation for loss of
distribution rights, loss of goodwill or any similar loss.
7.4
Change
of Control.
For
purposes of this Agreement, a "Change of Control" shall mean (i) an acquisition
of any voting securities of Manufacturer (the "Voting Securities") by any
"person" (as the term "person" is used for purposes of Section 13(d) or Section
14(d) of the Securities Exchange Act of 1934, as amended (or any foreign
equivalent) (the "1934 Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under
the
1934 Act (or any foreign equivalent)) ("Beneficial Ownership") of 15% or more
of
the combined voting power of Manufacturer’s then outstanding Voting Securities
with or without the approval of Manufacturer’s Board of Directors (“Board”);
(ii) a merger or consolidation that results in more than 50% of the combined
voting power of Manufacturer’s then outstanding Voting Securities or its
successor changing ownership (whether or not approved by the Board); (iii)
the
sale of all or substantially all of Manufacturer’s assets, or the entity that
owns the Batter Brain™ assets; (iv) approval by the shareholders of Manufacturer
of a plan of complete liquidation of Manufacturer; or (v) the individuals
constituting the Board as of the date of this Agreement (the "Incumbent Board")
cease for any reason to constitute at least 1/2 of the members of the Board.
In
the event of a Change of Control, then Distributor, at its option, may terminate
this Agreement in consideration for being granted 250,000 warrants of SMGY
(or
its successor) stock at a strike price of forty five cents (U.S.) (US$0.45).
If
Distributor elects not to terminate this Agreement and accept the warrants
in
the event of a change of control, then Manufacturer or its successor, at
Manufacturer’s or successor’s option, shall either (i) extend the term of this
Agreement for a period of three (3) years from the effective date of the Change
of Control, in which case the notice provision pursuant to the termination
for
no cause provision of Section 7.2(c)(iv) shall be extended to three hundred
sixty (360) days; or (iii) pay Distributor an amount equal to two (2) times
the
amount of annual gross profit generated by Distributor in the immediately
preceding 12 month period of this Agreement.
8.
Covenant
Not to Compete; Non-Solicitation.
8.1
Covenant
Not to Compete.
Distributor hereby covenants and agrees that, during the Term, neither
Distributor nor its Affiliates (hereinafter defined) shall, directly or
indirectly:
(a)
represent,
manufacture, market, or sell in the Territory any products which are in direct
competition with the Products;
10
(b) engage,
invest, participate, or be interested in any business which competes with
Manufacturer as Manufacturer’s business exists as of the date hereof
(collectively, the "Restricted Business"), anywhere in the Territory;
or
(c) have
any
interest in, own, manage, operate, control, be connected with as a stockholder
(other than as a stockholder of less than one percent (10%) of the issued and
outstanding stock of a publicly held corporation), joint venturer, officer,
director, agent, lender, representative, partner, employee or consultant, or
otherwise engage or invest or participate in any Restricted
Business;
8.2
Non-solicitation.
Distributor hereby covenants and agrees that, during the Term, and continuing
until the one (1) year anniversary of the expiration of the Term, neither
Distributor nor its Affiliates (hereinafter defined) shall, directly or
indirectly:
(a)
solicit
or recruit, or attempt to solicit or recruit, for employment or for independent
contract in connection with any Restricted Business operating in the Territory,
any employee or independent contractor who is or was employed or under contract
with Manufacturer during the Term; or
(b)
solicit
the business of any customer or prospective customer of Manufacturer’s (i) whose
needs became known to Distributor during the term of this Agreement, or (ii)
with whom Distributor has had dealings as a result of this Agreement, wherein
such solicitation involves any service or product that is similar to or in
competition with any service or product of Manufacturer either existing or
in
the process of being developed at the time of the termination of this
Agreement;
(c) Nothing
herein shall prohibit Distributor or Distributor’s affiliates from hiring any
employee of Manufacturer if such employee answers an advertisement for
employment with Distributor or Distributor’s affiliates in any newspaper of
general circulation or trade publication
8.3
Outside
the Territory.
Distributor shall not market, advertise, or sell any Products or establish
any
branch or maintain any distribution depot for distribution of the Products
outside the Territory or outside its approved Market Segment. Provided, however,
that nothing in this Agreement shall prohibit Distributor from selling any
Products to such customers in the Territory that intend to export the Product
outside of the Territory.
8.4
Severability.
If any
provision of this Agreement is held by any court of competent jurisdiction
to be
unenforceable because of the scope, duration or area of its applicability,
a
court of competent jurisdiction shall have the right to modify such scope,
duration or area or all of them so as to render them enforceable, and such
provision shall then be applicable in such modified form.
8.5
Affiliate.
The
term "Affiliate", as used herein, shall be deemed to mean, with respect to
any
Person, any Person directly related to such Person, whether through blood or
marriage, and any Entity directly or indirectly controlled by such Person,
through the ownership of all or any part of such Entity; and, with respect
to
any Entity, any Person or Entity directly or indirectly controlling, controlled
by or under direct or indirect common control with such Entity, through
employment or ownership, in whole or in part. The term "Person", as used herein,
shall be deemed to mean an individual. The term "Entity", as used herein, shall
be deemed to mean a corporation, partnership, association, trust, estate or
other entity or organization.
11
9.
Limited
Product Warranty; Indemnification.
9.1
Limited
Product Warranty.
(a)
Manufacturer
shall provide to the ultimate end-user (the “Covered Person”) that originally
purchases the Products from Distributor or its agents or sub-distributors a
limited product warranty (the “Limited Warranty”) that the Product shall be free
from defects in material and workmanship for a period of twenty-four (24) months
from the date of purchase (the “Warranty Period”), subject to the conditions and
limitations set forth herein. The Limited Warranty shall be provided only to
the
Covered Person and no other person. The Limited Warranty shall be void unless
a
warranty registration card and proof of purchase, in a form approved by
Manufacturer, is completed by the Covered Person and mailed to Manufacturer
within thirty (30) days from the date of purchase. The sole and exclusive remedy
for defects in Products covered by this Limited Warranty shall be limited to
the
correction of the defect by repair or replacement, at Manufacturer’s option. The
Limited Warranty shall not apply to Products that have been subjected to
mishandling, misuse, neglect, improper or inadequate storage, improper testing,
improper installation, repair, alteration, damage, assembly, or processing
that
alters physical or electrical properties. This Limited Warranty shall terminate
upon expiration of the Warranty Period.
(b)
Limited
Warranty Claim Procedure. If a Product is defective, the Covered Person shall,
during the Warranty Period, return the product to Distributor, who shall inspect
the returned Product for defects. If Distributor reasonably believes that the
returned Product is defective and is covered under the Limited Warranty, it
shall forward the returned product to Manufacturer for repair or replacement.
Manufacturer shall determine in its sole discretion whether to repair or replace
any defective product covered by this Limited Warranty. Manufacturer shall
pay
the shipping charges to return the product to Distributor and bear the risk
of
loss during transit, unless Manufacturer determines that the defect is not
covered by the Limited Warranty. In the event that Distributor or Manufacturer
determines that a returned product is not covered by the Limited Warranty,
it
shall immediately notify the Covered Person and request instructions regarding
disposition, and Distributor shall repay to Manufacturer the cost of shipping
the product to Manufacturer.
(c)
IN
NO EVENT WILL MANUFACTURER BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
TO DISTRIBUTOR OR DISTRIBUTOR’S CUSTOMERS. THE LIMITED WARRANTY TO COVERED
PERSONS IS IN LIEU OF ALL OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
12
9.2
Distributor’s
Indemnity.
Distributor shall indemnify and hold harmless Manufacturer and its Affiliates,
officers, directors, stockholders, employees, and agents, and the successors
and
assigns of all of them ( "Manufacturer’s Indemnified Parties"), and shall
reimburse Manufacturer’s Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and attorneys' fees) directly or indirectly arising from or in
connection with (a) any failure by Distributor to perform or comply with any
agreement, covenant or obligation in this Agreement, (b) any claim made at
any
time by any governmental authority with respect to the business of Distributor
and Distributor’s marketing, distribution, or sale of the Product; and (c) any
warranty claim pursuant to Section 9.1 hereof, if the Product that is asserted
to be defective has been subjected by Distributor to mishandling, misuse,
neglect, improper or inadequate storage, improper testing, repair, alteration,
damage, assembly, or processing that alters physical or electrical properties.
This Section 9.2 shall survive the expiration of the Term
9.3
Manufacturer’s
Indemnity.
The
Manufacturer shall indemnify and hold harmless the Distributor and its
Affiliates, officers, directors, stockholders, employees, and agents, and the
successors and assigns of all of them ("Distributor’s Indemnified Parties") and
shall reimburse from and against any loss, liability, claim, damage, expense
(including, but not limited to, costs of investigation and defense and
attorneys' fees) directly or indirectly arising from or in connection with
any
third party claim for death, injury or damage to property resulting from the
intended and proper use of any of the Products; provided, that the Distributor
shall have notified the Manufacturer promptly of such claim and shall assist
and
cooperate with the Manufacturer in the defense of such claim. This Section
9.3
shall survive the expiration of the Term.
10.
Miscellaneous.
10.1
Notices.
All
notices, requests, demands, claims and other communications hereunder shall
be
in writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed duly given (a) if by personal delivery, when so delivered,
(b)
if mailed, two (2) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid and addressed to
the
intended recipient as set forth on the first page of this Agreement, (c) if
sent
through an overnight delivery service in circumstances to which such service
guarantees next day delivery, the day following being addressed to the intended
recipient as set forth on the first page of this Agreement; or (d) if given
by
facsimile, once such notice is transmitted to the facsimile number specified
in
writing by the intended recipient for such purpose and the appropriate answer
back or telephonic confirmation is received. Any party may change the address
to
which notices, requests, demands, claims and other communications hereunder
are
to be delivered by giving the other parties notice in the manner herein set
forth.
13
10.2
Choice
of Law.
This
Agreement shall be governed, construed and enforced in accordance with the
laws
of the State of New Jersey, United States, without giving effect to principles
of conflicts of law.
10.3
Dispute
Resolution; Arbitration; Waiver of Jury Trial.
(a)
Initial
Dispute Resolution.
In the
event of any dispute relating to this Agreement or the breach, termination
or
validity thereof, the party making the claim will give notice to the other
party
setting forth the matters in dispute. The parties shall negotiate in good faith
to resolve such dispute for thirty (30) days following the receiving party’s
receipt of such notice of dispute. If the parties hereto shall not have resolved
the dispute within such thirty (30) day period, the items in dispute will be
exclusively and finally determined and settled by binding arbitration in
accordance with this Section 10.3, in which case either party may submit
the dispute to arbitration in accordance with the procedures set forth
below.
(b)
Arbitration
Rules.
Any
claim, controversy or dispute concerning questions of fact or law arising out
of
or relating either to this Agreement in connection with the performance by
either party hereto, or to the threatened, alleged, or actual breach thereof
by
either party hereto which is not disposed of by mutual agreement pursuant to
Section (a) above, shall be settled by arbitration, to be held in New York
City
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”), before an arbitrator jointly selected by Manufacturer and
Distributor. If
the
parties are unable to agree upon a single arbitrator, each party will select
one
arbitrator from the AAA list and the two arbitrators shall select a third
arbitrator from the AAA list. The
decision of the arbitrator shall be final, conclusive, and binding upon the
parties hereto. Judg-ment upon an award rendered by the arbitrator may be
entered in any court of competent jurisdiction. Except as otherwise specifically
provided in this clause, neither party hereto shall institute any action or
proceeding against the other party hereto in any court with respect to any
dispute which is or could be the subject of a claim or proceeding pursuant
to
this clause.
The law
to be applied in any such arbitration shall be that law referenced in Section
10.2 hereof.
(c)
Waiver
of Jury Trial.
THE
PARTIES AGREE AND ACKNOWLEDGE THAT THEY HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR RELATED TO THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes, including, without limitation, contract claims, tort claims,
and all other common law and statutory claims. This waiver is irrevocable,
and
shall apply to any subsequent amendments, renewals, or modifications to this
Agreement or any Exhibit to this Agreement.
10.4
Entire
Agreement.
This
Agreement and the Annexes attached hereto set forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby
and supersedes all prior or contemporaneous agreements, arrangements and
understandings of the parties relating to the subject matter hereof. No
representation, promise, inducement, waiver of rights, agreement or statement
of
intention has been made by any of the parties which is not expressly embodied
in
this Agreement, such other agreements, notes or instruments related to this
transaction executed simultaneously herewith, or the written statements,
certificates, schedules or other documents delivered pursuant to this Agreement
or in connection with the transactions contemplated hereby.
14
10.5
Assignment.
Except
as permitted in Section 2.4, neither Distributor nor Manufacturer shall assign
or delegate, by operation of law or otherwise, any of their rights and
obligations under this Agreement without the other party’s prior written
consent, and any such assignment or attempted assignment shall be void, of
no
force or effect, and shall constitute a material default by such party.
10.6
Amendments.
This
Agreement may be amended, modified, superseded or cancelled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by all of the parties hereto
or,
in the case of a waiver, by the party waiving compliance.
10.7
Waivers.
The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of any condition, or the breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach
or a
waiver of any other term, covenant, representation or warranty of this
Agreement.
10.8
Counterparts;
Facsimile Signatures.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures transmitted by facsimile shall have
the
same force and effect as original signatures.
10.9
Survival.
All
covenants and agreements of the parties contained herein which are to be
performed after the expiration of the Term shall survive the expiration of
the
Term.
10.10
Interpretation.
The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement. Reference
to
any agreement, document, or instrument means such agreement, document, or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof.
10.11
Public
Announcements; Disclosure.
Each
party hereto shall consult with the other party prior to making any such press
release, public announcement or public confirmation or disclosure regarding
this
Agreement as it relates to the other party, and no such press release, public
announcement or public information or disclosure shall be made without prior
written consent and approval of the other party. The foregoing shall not
preclude either party from making any disclosure that a party reasonably
believes is required by operation of law, rule or regulation or disclosing
that
the parties have a working relationship to prospective clients.
15
10.12
Manufacturer programs with Auto Groups or offered as part of a private label
program to be mutually agreed upon on an account by account basis within 30
days
of the signing by the Manufacturer. If a decision cannot be agreed upon,
Manufacturer has the sole right to render the decision on the splitting of
commissions. Any decision will be unilateral for all parties
involved.
[signature
page follows]
16
IN
WITNESS WHEREOF, the parties have duly executed this Distributorship Agreement
as of the date first above written.
XXXXXX
GROUP, INC.
Name: ___________________________
By:
Xxxxx
Xxxxxx
Title:
CEO
Signature:
/s/
Xxxxx Xxxxxx
Name: ___________________________
By:
Xxxx
Xxxxxx
Title:
CEO
Signature:
/s/
Xxxx Xxxxxx
17
EXHIBIT
A
DESCRIPTION
OF TERRITORY
Territory
Alaska
Florida
Illinois
Indiana
Massachusetts
Michigan
Minnesota
New
York
Ohio
Pennsylvania
Wisconsin
Canada
(All Provinces)
18
EXHIBIT
B
DESCRIPTION
OF DISTRIBUTOR’S SALES ORGANIZATION
[Not
provided]
19
EXHIBIT
C
FORM
OF
PURCHASE ORDER
20
EXHIBIT
D
PRODUCT
LISTING AND PRODUCT PRICE SCHEDULE
*
___________________________
*
Omitted
pursuant to a request for confidential treatment and filed separately with
the
Securities and Exchange Commission.
21
